Best Exchange Rates FX Facts

You may well think that you are being ripped off, but it is not always the case. In simple terms what you see on the news or in the paper or on yahoo finance is the Middle Rate or mid-rate. Some people want to buy a currency and some people want to sell a currency. There is a gap between the price at which you buy and the price at which you sell. In market terms this is normally called the spread. In the financial markets registered foreign exchange dealers normally deal in amounts of greater than $1m. So unless you are looking to buy or sell more than $1m you won't be able to access the very fine 'spreads' that the foreign exchange dealers can exchange their currency. If we take a common exchange rate the AUD to USD exchange rate this is expressed as $1 AUD = $0.78 USD or an exchange rate of 0.7800. To give you an idea the normal spread between the buy rate and sell rate is 5 points ie you might Sell AUD at 0.7800 and Buying AUD at 0.7805.

When it comes down to small businesses or an individual looking to exchange foreign currencies - the spread we get is a lot different. If you look at the average bank they are giving you a spread of around 400 points! Or to compare that to the example above you would Sell AUD at 0.7600 and Buy AUD at 0.8000. As you can see these rates are vastly different. Does it really matter? Well if you take an amount of $10,000 AUD and you convert it to USD the additional cost of the size of the spread is roughly as follows:

Spread Amount	Approximate Cost
5 points or 0.0005	$6.60
50 points or 0.0050	$66.20
100 points or 0.0100	$131.50
200 points or 0.0200	$260.00

So if you can save a 200 point spread then you can save up to $260 when exchanging money!

At Best Exchange Rates we show you the rates that you really get not just the mid-rate that is displayed on the TV or in the paper. This allows you to make real decisions about where you can get the best exchange rates and get better value.

There are a number of reasons. Some foreign currency exchange outlets may be more keen for your business or have a lower cost base and can therefore afford to provide better rates. You also need to watch out for additional fees that you might get when exchanging money. Some places, particularly around exchange foreign currency notes and coins, will charge you a transaction fee on top.

The main reason places will have different rates is that overall different places will have different amounts of each currency on hand or available. Some places tend to sell a lot more USD or maybe a lot of places buy a lot more USD so they will me more inclined to weight their buy and sell price accordingly. This can be changing all the time so that is why we provide our Best Exchange Rate comparison service.

If you are making overseas payments or receiving funds from overseas in foreign currency amounts the same concepts can apply. Some banks or foreign exchange traders will have a stronger client base of people who import (they tend to need to make payments overseas in USD) others will have more exporters (they tend to need to convert incoming payment from USD into AUD). This means that on a daily basis they tend to have stronger flows in one currency versus another. This often results in them shifting (or skewing is the technical term) their prices to offset their other business. You can take advantage of these skews in the foreign exchange rates by comparing and seeking out the best exchange rates.

There are lots of ways; most importantly you need some information. When you look up Best Exchange Rates you can see who is offering the best deal for your needs. This is always a good start; but depending on the amount you are looking to exchange you may be able to get an even better deal. When you walk into a branch or outlet always ask if you can get a 'dealer quoted rate' normally any branch will have access to FX Dealers that can give them up to the minute quotes with a much better rate. They will normally only do this for amount over $50,000 AUD but you never know your luck it can't hurt to ask.

We can take all this hassle away from you by using our Get Quote function (currently under construction). We send off your request to all the major FX providers and they come back with their best offers. This is a great way to get the best rates without leaving the comfort of your desk.